Tiered service

Tiered service structures allow users to select from a small set of tiers at progressively increasing price points to receive the product or products best suited to their needs. Such systems are frequently seen in the telecommunications field, specifically when it comes to wireless service, digital and cable television options, and broadband internet access. When a wireless company, for example, charges customers different amounts based on the number of voice minutes, text messages, and other features they desire, the company is utilizing the principle of tiered service. This is also seen in charging different prices for services such as the speed of one's internet connection and the number of cable television channels one has access to. Tiered pricing allows customers access to these services who may not otherwise due to financial constraints, ultimately reflecting the diversity of consumer needs and resources.

Tiered service helps to keep quality of service standards for high-profile applications like streaming video or VoIP. This comes at a cost of increasing costs for better service levels. Major players in the Net Neutrality debate have proposed tiered internet so content providers who pay more to service providers get better quality service.

It was not until the Internet began its rapid evolution that tiered services became a controversial issue. And it was not until the early 2000s that Internet carriers considered the option of abandoning net neutrality policies. In 2005, the FCC changed the way Broadband service providers are regulated. This made Broadband service providers "information services" instead of "telecommunications services". This means Broadband service providers are no longer subject to Common carrier Regulations. Since the beginning of the twentieth century, common carriage guidelines required the quality of service must be the same for all, preventing one customer from being favored over another. During the first decades of the 1900s, this policy related directly to the telephone industry, and AT&T specifically. However, in recent decades, the policy has grown to encompass a broader range of communication services. Preventing preferential treatment of customers in the realm of the internet is referred to as the policy of Net Neutrality. Former chairman of the FCC Michael Powell considered net neutrality to be fundamental to the success of the Internet and even one of the basic rules to maintaining freedom on the Internet. The Federal Communications Commission (FCC) continued its skepticism of tiered pricing for quite some time, and it was not until concerns about the availability of the spectrum began to surface that things began to change. FCC Chairman Julius Genachowski announced in 2010 that the benefits of tiered pricing include helping to prevent data backups on networks. Genachowski expressed his fear of a coming "spectrum crisis" as a result of the increase in smartphone usage ultimately clogging carrier networks. The FCC suggested a number of solutions to the problem including greater use of the unlicensed Wi-Fi spectrum, more , and more efficient arrangement of cell towers, but even these measures were not believed to be enough to keep spectrum bands open. Attempts have been made to put price controls on tiered service. United States Congress put a bill forth to prevent a "two-tiered pricing scheme with priority service." The bill did not pass congress, but allowed the FCC to stop ISPs from blocking websites.

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